A new look at net balances in the European Union's next multiannual budget

Whenever the European Union’s budget is discussed, much of the political focus is on net balances – whether countries pay in more than they receive –

Publishing date: 12 December 2019
Authors: Zsolt Darvas

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To inform debate on the 2021-2027 EU budget, I estimated the impact on net balances of the 2018 European Commission multiannual budget proposal, under three scenarios: elimination of rebates for all of the 2021-2027 new budget period, gradual elimination of rebates and non-elimination of rebates. These estimates were done on the basis of the EU’s ‘operating budgetary balance’ indicator, and on the basis of a new and broader indicator, the ‘net direct balance’. The calculation also takes into account the estimated net contribution of the United Kingdom to the 2021-2027 EU budget based on the draft EU-UK withdrawal agreement.

Under the baseline scenario of the Commission’s proposal, those member states that currently benefit from rebates would face between 0.01 percent of GNI and 0.06 percent of GNI increases in their net contributions to the EU budget, measured by the EU’s operating budgetary balance indicator.

Meanwhile, central and eastern European member states that received several percent of their GNI as net payments from the EU in 2014-2020 would face significant reductions, though they would still receive net payments of about two percent of their GNI in 2021-2027.

The methodology in this paper can be easily applied to estimate the net balance implications of any new MFF proposal.

About the authors

Zsolt Darvas

Zsolt Darvas is a Senior Fellow at Bruegel and a part-time Senior Research Fellow at the Corvinus University of Budapest. He joined Bruegel in 2008 as a Visiting Fellow, and became a Research Fellow in 2009 and a Senior Fellow in 2013.

From 2005 to 2008, he was the Research Advisor of the Argenta Financial Research Group in Budapest. Before that, he worked at the research unit of the Central Bank of Hungary (1994-2005) where he served as Deputy Head.

Zsolt holds a Ph.D. in Economics from Corvinus University of Budapest where he teaches courses in Econometrics but also at other institutions since 1994. His research interests include macroeconomics, international economics, central banking and time series analysis.